curious if this is even possible

Accountant · TX · Member since 2019 · 17 posts · 3 votes

I see on YouTube, people talking about leasing other peoples properties on airbnb and assume that's not possible because why would someone allow someone else to lease their property when they can lease their own property out to someone and reap the financial benefit and also I'm going to assume that HOAs can block people from doing that.
Am I correct in my assumption? my Dad ran into this issue in our state. I Know that if a home resides in a Neighborhood that uses Home Owners Associations(not all neighborhoods have them that I'm aware of) that they have the ability to restrict and impose fines on those that violate the associations bylaws, is it absolutely necessary have their approval to rent the rooms granted you own the property?

0 Reply

43 views

Most Popular Reply

Nathan GesnerBusiness Member

Moderator

Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

This is currently referred to as "arbitrage" but it's essentially subleasing. If you want to learn more about it, go to the forum for REAL ESTATE STRATEGIES > SHORT-TERM AND VACATION RENTALS and search for "arbitrage."

It can absolutely work, with short-term and long-term rentals. For example, I recently saw an owner renting a house for $800 a month. As a property manager, I know the home could rent for $1,400 a month. I could have offered the Landlord $900 a month guaranteed payment if she allows me to sublease. If she agreed, I could then rent the property for $1,400 and make $500 a month cash flow. The maintenance remains with her, she pays the taxes and insurance, so my risk is limited and I would cash flow more than I could with a purchase.

The key is to be open about what you are doing. If you hide it and the Landlord finds out, you are likely to lose the opportunity. You also need to find a way to make it beneficial, like paying them a higher rate, paying a guaranteed rent even when it's empty, handling minor maintenance, etc.

In my case, I was very busy and didn't approach it until it was too late so the opportunity went away.

The DIY Landlord Book4.7247 Reviews

Website View Page

3 Reply

See this reply in the discussion

7 Replies

Jump to latestLatest

Sort by

Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
6y
@Andre P., yes that is certainly possible to do.
You can lease a property where you are given the right to sublease it. The work to do airbnb or to rent by the room in general is different than what many landlord want for long term rentals.
However, you probably won't find landlords of nice places willing to do that. They would likely be concerned not only about getting paid, but also about the wear and tear on the units. HOAs and even some municipalities limit airbnb so that is an issue as well.
HOAs are created when land is subdivided for development. That is how they get the ability to control some things that happen on the property and also why not every neighborhood has one.
I'm sure what you suggest is possible, but it is a niche. It isn't something every landlord would permit to happen. Im sure there are scenarios though where it would be possible. Perhaps a landlord with a rundown unit. You could offer to do a cosmetic (paint, flooring, etc) rehab in exchange for a long term lease (maybe 5 years) that allows you to airbnb the unit.
1 Reply
Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
6y
This is currently referred to as "arbitrage" but it's essentially subleasing. If you want to learn more about it, go to the forum for REAL ESTATE STRATEGIES > SHORT-TERM AND VACATION RENTALS and search for "arbitrage."
It can absolutely work, with short-term and long-term rentals. For example, I recently saw an owner renting a house for $800 a month. As a property manager, I know the home could rent for $1,400 a month. I could have offered the Landlord $900 a month guaranteed payment if she allows me to sublease. If she agreed, I could then rent the property for $1,400 and make $500 a month cash flow. The maintenance remains with her, she pays the taxes and insurance, so my risk is limited and I would cash flow more than I could with a purchase.
The key is to be open about what you are doing. If you hide it and the Landlord finds out, you are likely to lose the opportunity. You also need to find a way to make it beneficial, like paying them a higher rate, paying a guaranteed rent even when it's empty, handling minor maintenance, etc.
In my case, I was very busy and didn't approach it until it was too late so the opportunity went away.
The DIY Landlord Book4.7247 Reviews
Website View Page
3 Reply
David Brow
Gold Canyon AZ · Member since 2019 · 17 posts · 1 vote
6y

@Nathan Gesnerundefined
Thanks for opening my eyes to even more possibilities! I'm trying to purchase a home for a rent by the room strategy and keep finding great things! Thanks.
1 Reply
Andre P.
OP
Accountant · TX · Member since 2019 · 17 posts · 3 votes
6y
Originally posted by @Nathan Gesner:
This is currently referred to as "arbitrage" but it's essentially subleasing. If you want to learn more about it, go to the forum for REAL ESTATE STRATEGIES > SHORT-TERM AND VACATION RENTALS and search for "arbitrage."
It can absolutely work, with short-term and long-term rentals. For example, I recently saw an owner renting a house for $800 a month. As a property manager, I know the home could rent for $1,400 a month. I could have offered the Landlord $900 a month guaranteed payment if she allows me to sublease. If she agreed, I could then rent the property for $1,400 and make $500 a month cash flow. The maintenance remains with her, she pays the taxes and insurance, so my risk is limited and I would cash flow more than I could with a purchase.
The key is to be open about what you are doing. If you hide it and the Landlord finds out, you are likely to lose the opportunity. You also need to find a way to make it beneficial, like paying them a higher rate, paying a guaranteed rent even when it's empty, handling minor maintenance, etc.
In my case, I was very busy and didn't approach it until it was too late so the opportunity went away.

thank you, ill do some reading in that section.
0 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
6y
There is a lot of dumb stuff being pitched as easy or lucrative on YouTube. This falls under that category.
1 Reply
Wesley W.
Rental Property Investor · The Vampire State · Member since 2013 · 2k+ posts · 2k+ votes
6y
The BP Podcast Show #358 discussed this exact strategy.
1 Reply
Andre P.
OP
Accountant · TX · Member since 2019 · 17 posts · 3 votes
6y
Originally posted by @Kevin Sobilo:
@Andre P., yes that is certainly possible to do.
You can lease a property where you are given the right to sublease it. The work to do airbnb or to rent by the room in general is different than what many landlord want for long term rentals.
However, you probably won't find landlords of nice places willing to do that. They would likely be concerned not only about getting paid, but also about the wear and tear on the units. HOAs and even some municipalities limit airbnb so that is an issue as well.
HOAs are created when land is subdivided for development. That is how they get the ability to control some things that happen on the property and also why not every neighborhood has one.
I'm sure what you suggest is possible, but it is a niche. It isn't something every landlord would permit to happen. Im sure there are scenarios though where it would be possible. Perhaps a landlord with a rundown unit. You could offer to do a cosmetic (paint, flooring, etc) rehab in exchange for a long term lease (maybe 5 years) that allows you to airbnb the unit.

Thank you for the response. Yeah I assumed with landlord tenant laws consent would be absolutely necessary in those scenarios to have the right to sublease. In my state written consent has to be done by the landlord or property owner.

0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.